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Can South African Gold Miners Catch up with Gold Prices?

South African miners can be categorized among senior or intermediate miners, but there are unique factors driving South African miners that merit special attention.

After outperforming other categories of miners in 1Q17, these miners disappointed in 2Q17. South African miners (GDXJ) have been facing several issues.

In 2Q17, South Africa was downgraded to junk status by Fitch and S&P (Standard and Poor’s). In June 2017, the South African government introduced a new charter, which requires companies to ensure that at least 30% of their share ownership is in the hands of black South African citizens. This was up from the latest requirement of 26%. On July 14, 2017, the government suspended this charter following a high court clash with the industry.

Individual stock performances

South African miners have given varied stock performances based on their individual operating performances. YTD (year-to-date), while Gold Fields (GFI) and Sibanye Gold (SBGL) have gained 55.2% and 35.7%, respectively, Harmony Gold (HMY) and AngloGold Ashanti (AU) have lost 1.8% and 1.0%, respectively.

To understand the latest Wall Street ratings and recommendations for these companies, check out Market Realist’s Wall Street’s Vision of Gold ahead of the 2Q17 Earnings.